Madison Avenue's Do-It-All Startup

How does a new agency get ahead? By offering a lot more than just ads.

(Business 2.0 Magazine) -- When Virgin America announced last year that it had landed $178 million in investment funding to launch U.S. passenger service - the most ever for a new domestic airline - ad agencies up and down Madison Avenue started prepping their pitches in hopes of winning such a sweet new account. Elite shops like Goodby Silverstein and Crispin Porter & Bogusky all showed Virgin's marketing chief, Spence Kramer, their brilliant strategies for branding the new airline.

Their ad ideas were first-class, but as Kramer recalls, "I just wasn't swayed."

MULTITASKING ADMAN: Carl Johnson wanted Anomaly to be the antithesis of his former employer, TBWA.

As a startup carrier that hadn't yet hired a pilot, Virgin needed more than just slogans and 30-second commercials. That's about when Anomaly, a two-year-old startup, brought a pitch that sounded more like a takeover bid: Carl Johnson, Anomaly's 48-year-old co-founder, hauled out plans to design the interiors of Virgin's new A320s, fashion the flight attendants' uniforms, and create the content for a pay-per-view seat-back entertainment system.

Anomaly didn't want just the usual hourly fees, either. "This is an investment where we get a cut of sales," Johnson told Kramer. One month later Johnson's no-name firm got the nod, to the astonishment of many in the industry. "The pitch was unlike all the rest," Kramer says. "They never even mentioned ads. They were telling us how we could make more money."

And that best explains why Anomaly is not only detailing Virgin America's A320s but also creating new brands for Coca-Cola (Charts) and even launching its own technology brand, a mobile-phone shopping platform, to upsell to ad clients.

If that doesn't sound anything like what a traditional ad agency does, then for Johnson - the former COO of $10 billion giant TBWA Worldwide - all is going according to plan. In a struggling $385 billion-a-year industry that's increasingly desperate for new leadership, Johnson is betting large on a breakout business model that, aside from its Manhattan address, shares little with Madison Avenue.

Instead of just ad campaigns, Anomaly is selling an all-in-one package of services for advertising, product design, strategic consulting, and technology licensing. The privately held firm pulled in a modest $15 million in revenue in 2006, but Johnson says Anomaly is already profitable and on track to hit $60 million in sales in three years - about what Crispin Porter does now. (15 percent of Anomaly's sales comes from traditional advertising.)

As a result, the old-guard rivals are taking notice. "Carl knows where the business is going," says TBWA president Tom Carroll. "Everyone talks about change, but no one comes close to what Anomaly is doing. If he's right, then everyone will move toward it."